Financial planning expert Kim Natovitz talks about ways recipients of a dementia diagnosis and their families can financially prepare for the costs ahead.
People don’t often plan for potential dementia diagnosis, but given the financial impacts of dementia care and the prevalence of the disease, experts say it is important to consider financial planning ahead a diagnosis. Being Patient spoke with Kim Natovitz, an associate with TriBridge Partners, about the ins and outs of medical insurance and resources to help families brace for the financial realities of dementia care.
- People should begin financial planning and consider long-term care insurance early, especially for those with a family history of dementia. After all, an individual would no longer be able to apply for long-term care insurance after a dementia diagnosis.
- Natovitz said seeking an elder law attorney is critical to navigating the complexity of Medicaid planning.
- An aging life care manager could be helpful with creating a comprehensive care plan and provide referrals to experts in elder care, financial and elder law services.
Being Patient: How important is financial planning before a diagnosis?
Kim Natovitz: We all have to think about planning for long-term care as part of our overall financial plan. For many people, it is the missing piece. We’re mandated to have car insurance. If we have a mortgage, we have homeowners’ insurance. Then, most of us will obtain our health insurance either through an employer or through an exchange. But long-term care planning is something that most of us have to tackle on our own. If you have a family member who has had Alzheimer’s or dementia, it’s especially important for you to begin your planning sooner rather than later.
We all have priorities in terms of looking at our overall financial plan, but don’t let perfection be the enemy of good. Certainly having some long-term care insurance would be better than not having anything at all. Most people begin looking at long-term care insurance about a decade before they retire. Most of my clients who are investigating whether this makes sense or not are probably in their 50s or so.
I would say that many individuals can buy some coverage for as little as maybe $2,000 a year, depending upon how much coverage they want to have, and that would be for long-term care insurance policy. There are short-term care policies, which will provide benefits that will be for a year or less that can be less expensive.
What we’ve seen is that over the last 25 years, there is more of a portfolio of products in terms of planning for long-term care. Employers are offering life insurance policies with long-term care riders that are meant to be ported when you retire. Insurance companies have also introduced a long-term care rider on a life insurance policy.
Being Patient: Does that mean your long-term care insurance is attached to your life insurance policy, instead of the two being separate products? And what do people get in return?
Kim Natovitz: Correct … You might be getting a life insurance policy anywhere from $100,000 to $300,000 of death benefits. You can accelerate the death benefit during your lifetime if you need to pay for long-term care.
Long-term care insurance policies will pay for care at home, meaning you’re bringing the health care delivery system to you and you have an aide that’s coming in, sometimes just for a couple of hours a day to give a spouse or partner some respite care. It will also pay for care in an assisted living facility or in a skilled care facility, depending upon the state.
Being Patient: What is the difference between Medicaid and Medicare?
Kim Natovitz: Medicare was designed to pay for skilled care that has a beginning and an end to restore [a person’s] function. Since dementia is typically irreversible and there is no skilled care that can essentially turn back the clock, Medicare doesn’t participate in the cost of care for someone who has Alzheimer’s or dementia.
For Medicaid, it really depends on your circumstance, and what state you are in [to qualify for Medicaid and to use it for covering dementia care costs] … it’s really important to consult with an elder law attorney, because while you do have to meet certain income thresholds in order to qualify for Medicaid, there may be ways … for the person who doesn’t need care to use assets to pay off mortgage, create a stream of income, or other strategies depending upon the state that you live in … But in general, Medicaid typically does require that you deplete a lot of your assets.
There are also a lot of subsidized programs available through various states for adult daycare or other types [of care]. In my community, there are a lot of senior services that are tax exempt organizations that rely on grants and individual contributions, and that can provide some respite care if someone is caring for a family member who has dementia. The Office on Aging in each community can be a great place to start to find out what resources are available to support individuals.
Being Patient: How may disability insurance help with paying for care?
Kim Natovitz: Disability insurance policies are income replacement policies. I had a client who had a stroke and he was not able to return to work because of paralysis and cognitive issues. His employer had what’s called a short-term disability and a long-term disability plan. He no longer received a check from his company, but he received benefits from both his short-term and long term disability carrier. Some long-term disability policies also have additional benefits if someone needs long-term care services. His policy actually provided an additional benefit that helped pay for some of the home care.
Being Patient: Where can people seek assistance for financial planning?
Kim Natovitz: While people who are planning for long-term care obviously want to be very careful with how they spend any money, there are what’s called aging life professionals. Sometimes, maybe paying for some time with an aging life professional and having a conversation with them, may lend itself to a lot of information. I also would suggest the National Association of Elder Law Attorneys. Their website is a great resource because you can find elder law attorneys in your state and often in your county. They tend to post a tremendous amount of resources in their blogs and so on. There are also different financial advisors who specialize in working with families who have Alzheimer’s or dementia.
The interview has been edited for length and clarity.
Contact Nicholas Chan at nicholas@beingpatient.com
